Should There Be a Minimum Wage?
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Wages should be set by workers’ needs, not by market bargaining. Left to the market, wages come out of an unequal contest between employers and workers, so there’s no reason to expect them to be fair. Instead, a fair wage can be worked out from what a worker needs to live decently, then fixed by law.
Justice H. B. Higgins made this argument in the 1907 Harvester judgment, which laid the groundwork for Australia’s basic wage. He rejected leaving pay to the unequal contest of the market and based a fair wage instead on “the normal needs of the average employee, regarded as a human being living in a civilised community.”
a fair wage can be worked out from what a worker needs to live decently
Bureaucrats can’t know what one man needs. That information doesn’t exist in the aggregate. See Hayek’s ‘The Use of Knowledge in Society’, which I simplified here. Justice Higgins should be more humble and aware of epistemological limitations.
The information Higgins wants is hard to come by. Prices can find and communicate it, fallibly, when not tampered with. Tamper with them, and it gets even harder to find that information.